Financial crimes, especially money laundering and terrorist financing, are an important problem all over the world. Weaknesses in financial systems increase the potential financial crime risks and money laundering techniques day by day. One of the countries facing money laundering risks is Ireland. Ireland aims to eliminate potential financial crime risks with its effective anti money laundering works, anti money laundering policy, and procedures
The 2010 Criminal Justice (Money Laundering and Terrorist Financing) Act entered into force in 2010. With this act, money laundering crime is clearly defined and penalties are specified in Ireland. Ireland's anti money laundering regulations law has been changed over time to comply with the European Union Directives (money laundering directive) and Financial Action Task Force (FATF) recommendations.
According to the Criminal Justice (Money Laundering and Terrorist Financing) Act, firms must conduct a risk assessment of money laundering and terrorist financing risks. In addition to this, the European Union, FATF and other local and international regulators agree that the foundation of an AML program is based on a risk-based approach. The purpose of risk assessment is to classify customers according to their risk levels and to apply a control process appropriate to each risk level. Many different components must be taken into account when companies make risk assessments.
Sections 33 to 39 of CJA 2010 describe the "Customer Due Diligence" measures that companies must implement before starting a business relationship with customers. Customer Due Diligence procedures are one of the key keys to AML compliance in Ireland. According to CJA 2010 Section 33, firms can open the client account before the CDD is complete, but the client cannot take any action until the CDD is complete.
One of the Customer Due Diligence procedures is sanction, PEP and adverse media screening. Countries impose sanctions on individuals they want to restrict. It is forbidden for companies to establish business relationships with people who have been sanctioned. Therefore, companies must control their customers by applying sanction screening in the customer onboarding process.
PEP stands for "Politically Exposed Person". PEPs have more opportunities for money laundering, corruption and bribery crimes than normal citizens, according to AML regulators. For this reason, PEPs are risky customers for financial institutions. Of course, PEPs are not prohibited from opening an account in a financial institution. However, due to the high risks posed by PEPs, companies need to detect PEPs in their customer account opening processes and apply a special AML program for them.
Adverse media is also known as negative media. Risks for financial institutions do not come only from sanctions and PEPs. Every year, a huge number of news from media sources about money laundering, terrorist financing, corruption, bribery, human trafficking and arms smuggling are published. Every year, a huge number of news from media sources about money laundering, terrorist financing, corruption, bribery, human trafficking and arms smuggling are published. Companies thus protect their reputation and prevent potential risks and threats.
Risks for companies are not limited to the customer onboarding process. Customers' information and customer risk level may change over time. Therefore, ongoing monitoring is of great importance for AML compliance. Companies must apply CDD procedures at regular intervals to detect changing customer information and risks. If deemed necessary, Enhanced Due Diligence procedures should be applied to high risk customers.
Sanction Scanner is an Anti-Money Laundering compliance software. Sanction Scanner provides solutions that help companies operating in Ireland under AML obligation to meet AML requirements. You can contact us to get information about our AML Solutions.